Outsourcing: Time to Talk Back to the Media...

The world is a complex and intricate place. How is anyone to understand it--even a particular piece of it, for example the United States government in Washington DC and its economic policies? It is a big problem, for the standard sources that I was taught (perhaps wrongly) as a child to rely on--the Washington Post, the New York Times, Walter Cronkhite on the evening news--are breaking down.

So it is time to build new institutions. And one way is to take advantage of the fact that those of us whom Jeffrey Rosen calls The People Formerly Known as the Audience are no longer on the receiving end of a media system that runs one way only. We can talk back--fight ignorance with information, fight truthiness with truth, fight media narratives with the real story.

For example...

Back in early February of 2004, then U.S. Council of Economic Advisers chair N. Gregory Mankiw spent some time trying to explain the issues around "outsourcing" to America's elite Washington political news reporters. Greg Mankiw's standard paragraph about outsourcing is very much like mine--like that of any neoclassical and neoliberal economists--and goes something like this:

As with any change in technology that increases the volume of international trade in goods and services, the "outsourcing" of service-sector jobs creates winners and losers--but almost surely more and bigger winners than losers. Big winners are workers in poor countries who get better jobs working for firms that can now export services to rich core countries like the United States. The major losers are those who previously held the now-outsourced service-sector jobs in the United States, who must now find new and different jobs and almost surely find that their skills are worth less. But even in the United States the losses to the losers are outweighed by gains to winners: American workers who find their skills in industries in higher demand as foreigners spend their increased dollar earnings, American consumers who see the prices of what they buy fall, and American shareholders and managers who see the profits of their companies increase. We should worry about the distributional consequences of "outsourcing" and how policies can cushion and offset them. But we should never overlook that--as is almost surely the case with expanded trade--"outsourcing" increases the total size of the economic pie.

Greg Mankiw failed.

On February 10, 2004, he woke up to an unpleasant news story in the Washington Post:

Bush Report Offers Positive Outlook on Jobs: February 10: Wading into an election-year debate, President Bush's top economist yesterday said the outsourcing of U.S. service jobs to workers overseas is good for the nation's economy.... Mankiw's comments come as the president struggles to shore up support in manufacturing states that have lost millions of jobs and Democratic rivals make economic nationalism a centerpiece of their attacks on the administration....

Mankiw's conclusions may prove discordant during an election year, when many workers remain concerned about their prospects...

It happened again on February 11:

Bush, Adviser Assailed for Stance on 'Offshoring' Jobs: Democrats from Capitol Hill to the presidential campaign trail lit into President Bush's chief economist yesterday for his laudatory statements on the movement of U.S. jobs abroad.... Rep. Donald Manzullo (R-Ill.) called for the resignation of N. Gregory Mankiw.... "I know the president cannot believe what this man has said," Manzullo said. "He ought to walk away, and return to his ivy- covered office at Harvard"...

February 12:

Hastert Rebukes Bush Adviser: House Speaker J. Dennis Hastert... rebuked the chairman of President Bush's Council of Economic Advisers.... The speaker's statement, headlined "Hastert Disagrees With President's Economic Advisor On Outsourcing."... "I understand that Mr. Mankiw is a brilliant economic theorist, but his theory fails a basic test of real economics," Hastert said.... A chorus of Democrats preceded Hastert in condemning Mankiw's argument.... The controversy is embarrassing for Bush...

And February 13:

Bush Parts Ways With Aide on Job Losses: President Bush... distanced himself from his chief economist, who this week spoke approvingly of jobs moving overseas. The president... did not mention the aide by name but expressed his concern about the expatriation of jobs.... Several economists, including some Democrats, have defended Mankiw, a Harvard economist, for speaking the economic truth. But his remarks have become a political liability for the president...

Now the Washington Post's news reporters here--Jonathan Weisman, Mike Allen, and Dana Milbank--know, on some level, that they are being unfair to Mankiw. They don't say that what he said was inaccurate, or short-sighted, or analytically unsound. The descriptive terms they use are things like "discordant," "embarrassing," "political liability" that hint that they know that they are giving Mankiw a raw deal, and that flag that fact for careful reasons. But can you find anything of the standard neoclassical-neoliberal analysis of outsourcing in their stories? I can't.

Greg Mankiw thought a bunch of reporters were coming to talk to him about the state of the economy and the analysis made by the Council of Economic Advisers in its 2004 Economic Report of the President.

WRONG!

The last thing the Washington Post's reporters wanted to do was to convey a thumbnail summary of Mankiw's analysis of outsourcing. That's simply not the business they saw themselves as being in. To get even a hint of what the issues are, you have to abandon the news pages of the Washington Post for Bob Davis in the news pages of the Financial Times or the Wall Street Journal:

WSJ.com - Some Democratic Economists Echo Mankiw on Outsourcing: [A]mong Democratic economists... Mr. Mankiw's remarks were mainstream. "Basically I agree with Greg's thrust," said Janet Yellen, who was President Clinton's chief economist. "In the long run, outsourcing is another form of trade that benefits the U.S. economy by giving us cheaper ways to do things." But Ms. Yellen added that many moderately paid U.S. workers are suffering because of outsourcing.... Said Laura Tyson... another of Mr. Clinton's former chief economists: "The traditional economic response does sound hard-hearted and can be criticized for not taking nearly as seriously the dislocation as one should."... "On efficiency grounds, he [Mr. Mankiw] is right," said former Clinton Labor Secretary Robert Reich, meaning that the economy becomes more efficient when costs are reduced through trade. But Mr. Reich... said the administration hadn't made "a serious attempt to deal with the profound structural problems of an economy in transition."... "Linking outsourcing to aggregate employment decline is a bit of demagoguery that will bite him in the b--- next February if [Kerry] becomes president," Mr. DeLong said.

The problem is not that the Washington Post hires people who are unintelligent or lazy while the Wall Street Journal hires whip-smart workaholics. The problem is that conveying accurate information about the economy is high up on almost all the *Journal's* news reporters' and way down on almost all the Post reporters' list of priorities.

Making a splash--yes. Saying "Greg Mankiw says that increased outsourcing is like expanded trade: there are winners and losers but more winners" tells the truth but doesn't make a splash. Saying "Greg Mankiw says that outsourcing U.S. jobs to workers overseas is good for the nation's economy" is not truth but truthiness, but it does make a splash. Saying who is one-up politically inside-the-beltway today--yes. Pleasing your editors so they'll give your stories better placement--yes. Pleasing your sources--like Denny Hastert--so they'll keep talking to you first--yes. Informing the public about the functioning of the economy and about the dilemmas of economic policy--what's that?

Now there was a little bit of information inside the pages of the Washington Post that week. Steve Pearlstein devoted a couple of columns to arguing that outsourcing was bad for America after all. The editorial board defended Mankiw. But neither offered Greg the 2000 or so words in the high news hole he would have needed to get his points across with the same impact as the stories calling his analysis... not wrong but "discordant" or "embarrassing".

On the micro level, it is clear what should be done. If you want to understand Washington DC, the American government, and American economic policy, then: trust the news pages of the Wall Street Journal, trust the Financial Times, trust the political and lobbying coverage of the National Journal. Trust Bloomberg and Knight-Ridder to try as best they can to get the story straight under immense time pressure. Trust nothing else until it is verified. Use yesterday's *Post* for fishwrap. Use today's *Post* to line the kitchen floor while you continue to housetrain the new puppy.

On the macro level, it is less clear what can be done. It should be easy. After all, nobody goes into journalism (or few go into journalism) to mislead the public. But it turns out to be very hard. Government is how we, collectively, decide on and choose agents to carry out our common and joint priorities. The right model to cover government is that of how you would report to your siblings on the agent who rents out your mother's condo in Palm Beach. Government is vastly inferior to Hollywood as a venue for glitterati gossip--yet much political news coverage makes the coverage of Brad Angelina's new rugrat look profoundly serious. Government is, after all, vastly inferior to the world series as a sporting spectacle--yet much political news coverage is more "inside baseball" than the most inside of inside baseball itself.